tv Bloomberg Markets European Close Bloomberg September 6, 2016 11:00am-12:01pm EDT
close on "bloomberg markets." we take you from detroit to dublin and cover the stories and u.k. in saudi arabia -- in the u.k. and saudi arabia. the riskier the asset, the better the performance. the latest markets outlook from aberdeen's chief investment manager. vonnie: volkswagen is buying a stake in navistar, looking to gain a foothold in the u.s. heavy truck market is this too much of a gamble? m&a. day for er raising its offer for
monsanto for the second time. less appetite for risk today. the best run for almost a month -- gmm is the function. this is the equity column. predominately in the red, the ftse down by .75%. look at stirling, highest level since the end of june. a flavor ahead of the big ecb meeting on thursday. airbus shares up by 1% today. vietnam is likely to rank among the top 10 fastest-growing aviation markets in the next couple of decades. vietnam airlines signed a deal
a350 widebody aircraft fronts ollanta was in vietnam. expand is estimated to the air travel market by 20% in the next the years. -- president francois hollande was in vietnam. the japanese carrier planning to claim compensation for rolls-royce engines. forming a cancellation of a dozen flights last month after finding broken turbines on three aircraft. the formal compensation may be discounts on future purchases or free cars. shares and rolls-royce down by .7%. swiss gdp, the economy secondating in the
quarter, rising by .6%. expanding from a revised .3% in the prior quarter. -- ant the eurozone economy that has really rebounded. the abolition of the euro sent the franc into a tailspin. the comparison between swiss gdp and euro area gdp run back to 2013. julie hyman has the details. julie: u.s. stocks are still trying to figure out direction here. at last check, we saw all three major averages had turned into the red. it makes market today. -- a mixed market today.
it is now the 41st straight session we have not seen a move of at least one person in the s&p 500. that's 1% in the s&p 500. to july 8, go back that's the last time we saw a 1% move in the s&p. the fixed today still stands below 13. we saw a bit of an uptick in activity today following that nonmanufacturing report, the measure of the services economy. here is the drop we had in yield after those numbers came out. the banks have been really trading in tandem with those bond yields over the past 12 months or so. wells fargo, citigroup, bank of america all turning lower. financials group is the biggest drag on the s&p 500.
the deal activity we've been tracking, navistar shares surging after volkswagen agreed to by seeking .6% of the company 76 a share. 21.81 is where the shares are trading. this may open the door for volkswagen to buy all of navistar. says it could hurt their business. that is the other track today besides that isn report. mark: we will be speaking with both ceos a little later on. vonnie: let's check in on the first word news. courtney: saudi arabia may be taking an ax to its budget, looking to shrink the
largest deficit -- the government ministry would have to cut budgets by nearly a quarter. the parent company of fox news as it has settled a gender discrimination suit i gretchen carlson. fox apologized. fox will pay carlson $20 million. in july, carlson sued fox news ceo roger ailes. president obama is reassuring asian allies of the u.s. commitment to the region. president obama: we will stand with our allies and partners in upholding fundamental interests. including the freedom of navigation, peaceful resolution of disputes.
that is the security we seek. courtney: president obama also pledged $90 million to clean up unexploded bombs and other munitions dropped in laos during the vietnam war. china is considering a wide-ranging overhaul of consumer taxes. ministry officials probably support tax cuts on less expensive toiletries and cosmetics. they are considering raising taxes on alcohol and tobacco. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. mark: is the ecb suffering from a case of bond buying exhaustion? europe's central bank is widely expected to extend the qe program. will they run out of assets to buy? luke hickmore from aberdeen asset management joins us now from edinburgh good to see you.
rules?ime to tweak the is the ecb going to fiddle with the qe rules on thursday? luke: possibly the most widely expected thing that they do. actually, the risk is if they don't. the economy is ok, it is picking up a little bit, volatility has been very low. is this the time to do it? possibly not. they will wait for the fed to put rates up and then talk about expanding qe the euro goes down again. mark: there's extending it as well. and there's maybe, because they are running out of bonds to buy, change some of the dynamics. is that necessary in this meeting? of those technical changes around the amounts they can buy and that what level they we don't seebuy much in september.
maybe take a pause during a policy month for everybody else could see what everybody else does and then react. there is a risk that they start running out of these bonds to buy. this will evidence the ecb is struggling. vonnie: they have taken a bit of a breather. are they hoping that yields will rise to put more in their universe to buy? luke: maybe. many central bankers looking for yields to rise at the moment. those government bond yields get further and further into negative territory to force investors into risky assets. economy improve a
bit in terms of sentiment post u.k. referendum. rates may be a little better. see if that is going to stick until they react further. what point does it become a vicious cycle where one central bank is waiting for the other central bank to do something? bee: it is likely to december. today's ice and number suggests we will not see it in a couple weeks time. december is a very light meeting. -- live meeting. election that it is easy to wait until december, isn't it? it is more likely december than september. mark: you said the bank of england is struggling. call its efforts
so far hugely successful. -- ouraving to pay more managers like yourself unwilling to the part with your higher-yielding long-term bonds? willing -- quite happy to part with my low yielding government bonds. i've been buying credit and not government bonds on the long end of the old curve. -- yield curve. after a week of a bit of softness -- that may have just cleared out a few bulls. a quick question on we are up to 50 basis
points whereas we had been almost negative at one point in the past month or so. does that continue and is the bank of japan doing this on purpose? are they hoping to give banks a bit of a left? -- lift? luke: central banks are more concerned about getting growth and inflation than bank profitability. bankless interested in profitability than he is jobs. that is the case in japan as much as it is anywhere else. 1.6 basis points from a tiny positive number. yields will go lower. i would rather be in riskier credit than government at the moment. mark: luke hickmore of aberdeen
spending at a solid pace. enbridge has agreed to buy spectra energy. the stock for stock transaction is valued at $28 billion. that is your bloomberg business flash for this hour. mark: good bond investors benefit from the european commission's $14.5 billion tax ruling against apple? there could be a bonus for bond investments in payment goes through. it could help narrow the premium on 10 year i response over german debt even further. , want to bring in dara doyle our dublin bureau chief. ara: what they say is that this dustke having an offshore
-- there is no downside. if you do get the $13 billion, that is 10% or a little less that makes our and look attractive rather than france and belgium. the yields across europe have been helped anyway by the ecb. that is the dominant play, isn't it? dara: you are absolutely right. all investors care about is that mario draghi will shore up european bond market is necessary. ireland is still trading a little bit below french and belgian levels.
thisanalysts argue is windfall comes through, it will be another win for investors. vonnie: you can see how it -- we are downup 47 basis points now. talk to me about the corporate tax arrangements. that thereying wouldn't be a downside. not betionals would violent even if apple ends up having to pay all of this money. england can potentially charge but it wants now. the government would argue
that it is not that clear that if you cast any shadow over corporate tax at all, it could scare investors off. -- the commission cannot get involved once it leaves. , thethe u.k. leaves the eu counteracting force there, u.k. could set its corporate tax rate, no interference on the other hand, you do lose access to the single market potentially. we will see how it plays out over time. you have to fight this, i guess. our other companies getting jittery that they might also have bills now? dara: what we know is that the commission has said there are no other investigations into irish-based companies.
there can be as many as five or six other cases pending. they are coming through tax arrangements. we will learn over the next few months or so. the commission has a big job to 13 billionthe huge euros -- we are unlikely to see anything in the that we don't know for sure. monthsin the next six that we don't know for sure. vonnie: saudi arabia making it investfor investors to in their stock exchange. this is bloomberg. ♪
this is the european close on "bloomberg markets." vonnie: for the second time in 15 months, saudi arabia is loosening rules on foreigners investing into their stock exchange. yusuf contribute to the capital market authority chairman and fast if the recent tracking with the result of lower oil prices. >> no. that had been our strategy when planned with- specific time. some of them are still within the strategy timeframe. some of them were accelerated to respond to the market needs. some of it is exhilarated had itsthe oil price highest priced at $50. we are following the market
needs good we want to make sure we are responsive and make sure that we support the economy. >> there's a lot of excitement about the upcoming lifting of saudi aramco, the world's most valuable company. what are you doing to help with the ipo? >> we are doing everything we can. this is the largest company in the world. we are very excited. aramco, theng to a joint task group coordinating making sure we are ready and that aramco is ready. the decision of when to come to the market is a shareholder decision. >> is the ability to absorb and ipo of the size and issue?
>> not at all. in terms of systems, i don't think we have an issue at all. , i think itsize depends significantly on how much the shareholders are going to sell. they said 5%. accurate,uations are i don't think a lot of supply would be enough. that's why we are making sure we are able to get into the exchange. the decision may be made that they will be joined by another to whichonal market aramco stocks will be listed. the decision has yet to be made.
>> which exchanges are you actively considering to call host? we haveis nsomething any say on. this is the shareholders and we are supportive of the shareholders decision at the end of the day. they are sophisticated enough to choose the right market. talking about saudi arabia earlier on bloomberg television. what are minutes away from the european close. check out this board. stocks will fall for the first day in four. this is bloomberg. ♪
third of 1% are in today was the flip of friday. friday the jobs report sent stocks higher in europe. run was the most since early august. it went down 4% this year. earlier, we were the highest since january. acquisition today, bayer has sweetened its deal for monsanto. it is europe's biggest publicly traded health care provider. charon saloon is owned by a private equity company here. the merger should result in savings of about 50 million euros year. it will be highly accreted. , a 14 point shares
decline her. the french payments processor cut its sales and profitability forecast. they are fighting brazil's economic woes. they are adding to evidence the shifting the u.s. to payments cards with chips in them. it's becoming problematic for the industry. that's 14% lower today. increased less than forecast in germany. there is a surgeon investment from the euro area. orders arising .2% from june. economists increase -- forecast an increase. that signals the momentum in europe's biggest economy has , thet business confidence most since 2012.
ecb, vonnie. we are showing the volatility going back to 2010. vonnie: we're looking at the dollar index. it is above 95 right now. after it's in contraction. if you look at the sub reportnt, the employment shows a drop down to 50.7. it is very important to chair yellen. that was down .7% today after a revised number in july. it's a negative number for employment. these little data points are pointing to weakness on the labor front. i want to move elsewhere. u.s., you are seeing the
dollar yen trading at 132. this is a stronger yen. course, the euro strengthening and strengthening on the back of the weaker u.s. data. the japanese 30 year yield is worth looking at. it is 51 basis points. they will actually want more of that for the 30 year yield to go higher. let's look at the major averages. the dow jones and s&p are unchanged after having a choppy morning. the data are really wait on them as well. let's go to midtown manhattan and abigail doolittle has more from the nasdaq. : we do have the composite index up ever so slightly. there is one factor that is on fire this morning. this is the chinese internet stock. we are looking at baidu, they
are all sharply higher. best was on pace for its day in seven months. sweeney, he says this could reflect location and sector rotation. higher alibaba sharply as the company's ceo has presented at the g-20 summit, making the case for business growth among small to midsize businesses. the company did enter into a wouldith something that create commerce in china. yahoo! is also sharply higher. they really act as a tracking vehicle for alibaba, considering the 15% stake in alibaba. it's not just china.
some other internet companies are seeing strengths. abigail: we are looking at a lot of strength in the u.s. internet companies. the one that stands out is netflix. it is up 2%. the some of the analysis part suggested netflix could he more than 25% upside potential. domestic saturation concerns and a price hike. those have weighed on those shares. this is been a rough year for netflix. we see this range of trading. concernseflects the and saturations. stockecently, we do have of the top of the range. it is down 13% on the year. create above the 200 moving day average, a vehicle brake above the range. we're likely to see netflix drop
back down into this range. vonnie: thank you. let's take in some first word news. presidentthe filipino is trying to mend fences with president obama. the white house canceled a meeting with him in laos after his tirade at the u.s. president. wasarned that the u.s. warned against interfering in a war against drugs. he said he regrets his comments. flights are resuming at london city airport after a runway was blocked by protesters. travel was disrupted until early afternoon. police arrested nine people. claimedves matter responsibility for the protest. there was a deadly attack in afghanistan. two explosions killed at least 35 people. another nine people were wounded. the taliban has been a gaining
ground on territory across afghanistan. investigators have come out with a preliminary report on that crash in to buy last month. they found that the pilot tried landed too far down the runway. the wind shifted. all 300 people managed to escape. a firefighter was killed when a fuel tank exploded. hurricane new and slammed into loss cabo's. it knocked out power in some stranded tourists. with heavy rains and strong winds. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. mark: thank you very much. switzerland's economy is getting back on track. it is about 18 months off.
6% in the three months since june. that is the fastest pace since june. the gdp expansion in the arozone it, joining us is cover of the swiss economy. talk to me about the reasons for today's best quarterly performance for the swiss economy since 2014? expanded 0.6% through june. that is because of government spending. spending did have the greatest part. the question is is that growth sustainable? not all the sectors are doing equally well. pharmaceuticals are doing fantastically. machinery is still really hurting. they have said that things have stabilized. is it too early to say the
economy has gone over the exchange rate shocker? that moved by the s&p to cap -- to scrap the cap. >> in a way the swiss economy did adapt very quickly. if you look at the historic data, only one quarter was negative. is growing a lot slower than it did in the past. this year it's only going to expand about 1% to 1.5% according to the swiss national bank where it projections -- bank. vonnie: we forget that the swiss national bank was one of the first to give negative rates. it's a great story. onple are paying insurance
cap stuff. there is so much cash lying around. >> i guess it was a matter of are mostre corporate's affected by this. banks and corporate's are charged by the central bank. they pass it on to the individual savers. they started passing on to corporations. holding cashrted and storing it in their own facilities. spoke to colleagues insurance companies. aey told us there has been market increase in demand for this kind of product. vonnie: viewers can step into my terminal. that is the chart number that you see. there has been a drop in consumer prices. it is relative. imports and exports
being affected as well, this is a one time thing. it will be cheaper for people to buy. that was a one-time adjustment? >> primarily. pricesar consumer slumped the most since 1950. that is quite considerable. the bank points out we don't talk about deflation in regard to switzerland. that is because it's not all areas of consumer prices that are affected. services prices have not declined. prices, it is primarily imported prices. domestic prices have not fallen. vonnie: that is zoe in zurich. our thanks. volkswagen is a buying a stake in navistar. that is next.
vonnie: live from london and new york, i'm vonnie quinn. mark: this is the european close on bloomberg targets. let's get to a big interview. let's get back to dealmaking. vw well buy a stake in navistar. the automaker is attempting to refocus after its emissions cheating scandal. here to talk about a deal, we are joined by the chief executive from navistar. you, thankstart with you for joining us this afternoon. >> you're welcome. mark: some say this marriage is
not without risk. share ins shrinking the united states, how much of a risk is this for volkswagen? statement. one case, the fun is better and the changes are much higher. they have the technology. they have done a great job in their efficiency improvement and cost improvement. gainedve stabilized and market share. now is the right time for us. we are developing a new powertrain component. with the start of this development, it's good to have a partner like navistar where they can be more upscale than before. stateshy has the united
confounded volkswagen? it was a question even board for the cheating scandal -- before the cheating scandal. why is the united states so difficult to crack for vw? will this give you traction there? >> we started our company one year ago. now we are making the next step in a way to go into the u.s. market. it's always different than the european market for trucks. the structure is different. it's a classic conventional truck and what is common is the powertrain. with our first step here with this equity level, we can fulfill our technology.
i think we can form a really good successful alliance. has the truck and bus division been affected by the missions -- emissions scandal? >> no. it's a completely different area. we formed our division a year ago. it is an independent company. we are going our way. business, the market overall is changing globally dramatically. you have to be on a level to generate economic diversity. doings what we are together with navistar. vonnie: we would like to bring in the navistar ceo. to him. just listening congratulations on this. this makes volkswagen one of your major shareholders. anticipate
difficulties? >> no. as representeds by a board of directors are very satisfied and enthusiastic about this opportunity to have a partnership with someone like volkswagen. using: will you move to volkswagen products? >> may have been a great partner to us. i would anticipate making those changes in the short term. now that this is out of the bag, we will put our people together and line a product program that allows us to take advantage of the synergies that we have highlighted. ultimately, customers will choose. this is a real opportunity. we have made ourselves into a leaner company. now we need to scale and this is going to give us access to that
scale. takee: hopefully you can advantage of the truck brands. they have been successful in europe. where do you anticipate picking up chair? >> we do anticipate picking up market share. i think our market share went down for several years. it seems a bottomed out in several important vehicle segments. it has begun to rebound. i important the market share will rebound. this is going to make it happen faster and better as we go forward. arotech -- carl icahn said about this? is he in favor? single out anybody, but they all voted unanimously for the strategic alliance. vonnie: our thanks to the ceo of navistar and volkswagen. congratulations to you both. breaking news now.
mark: from an overcast london it's battle of the charts. we look at some of the most compelling charts of the day. this is what they mean for investors. charts atcess these the bloomberg. taking things off is joe. joe: a lot of people are interested in the impact the u.s. election will have on markets. people are looking at the peso to being sensitive given donald trump's rhetoric about rhetoric and promising to build a wall. we've seen some evidence of
that. at 6:00 a.m., trump is back in the lead. it's just one poll. check out this chart. it has two lines. the light line is dollar/peso. 6:00, i have highlighted in that rectangle. you saw the white line top up a little. generally, the two lines are moving in tandem. it is notable that the dollar pop higher only against the peso right after that poll. there is evidence that the poll results are starting to happen and have an impact. you can see that chart. here we go. i'm going to give it a try. we didn't get to talk about the yuan. he what the connection
between the two is. libor has been rising. becausen rising regulations are coming in and so forth. there are shorter returns on three-month debt. is, i don'tout it know if you knew this, a lot of chinese companies, their debt is related to libor. libor rate is debt isng, your increasing. this help investors see big additions to their bills. it's putting pressure on the yuan to strengthen. there were stronger strengthening's in july. -- we should be appear. ok. i just read it. i just lost. mark: keep going. never give up.
vonnie: i got my series run. the point being the yuan is strengthening and investors are having a difficult time of it. they are having to pay more. mark: where can we find it? vonnie: you can find it in our chart library. mark: if you were me, who would you give it to? you can't do that to me. i didn't know that connection. vonnie: how did you get my opponent to vote for me? mark: who would you vote for if you were me? vonnie: i would give it to joe, obviously. that point in time that he encapsulates. mark: because you are my boss, a vonnie, joe gets it. you did tell me to give it to
joe. i love both charts. joe, you are the winner. well done. let's have a check on the markets. it is 25 minutes away from the end of the tuesday session. it's been a funny day. we were up, we were down. we had the week nonmanufacturing isn. the week jobs report sent stocks higher. just deciding what this data means for the fed, it's pushing back expectations for the fed rate hike in september. that is the end of today's edition of bloomberg markets. this is bloomberg. ♪
scarlet: good afternoon. david: we are covering stories from san francisco to london. scarlet: this is what we are watching. stocksthe ecb consider to buy? david: how to make apple grow again? they will host their annual media circus this week. boxes tickingp this week. let's head to markets with julie hyman. anye: we are not seeing resurgence of elite. the summer has wound to ase